Wearable tech the future of life insurance

Smart devices such as Fitbits and Android watches are now "filling in the gaps" for life insurers hungry for customer data, while those who stick to "old world visions" could find themselves left behind.

MLC executive general manager of insurance, David Hackett, said banks and insurers "sticking with old world visions" on how to do business will struggle to grow as technology advances rapidly. Photo: Wayne Taylor

"We really are on an exponential progression around wearables, telemetrics, virtual reality, and we will see over the next decade dramatic advances in technology, data, and capability," Mr Hackett said at the FST Media Future of Insurance conference in Sydney on Thursday.

"How we embrace that and evolve our businesses to deliver more suitable outcomes for our customer base, I think is still just open to our imagination."

MLC became one of Australia's first insurers to use smart watch technology – an Intel Basis Peak fitness and sleep tracker – to track customers' habits and reward them for good behaviour. The watch, which was unveiled last November, can track customers' heart rate, sleep patterns and physical activity.

Mr Hackett said the biggest challenge facing life insurers is properly using the data MLC receives. Unstructured data and analytics are increasingly being monitored and used to determine how best to underwrite risk.

"We get data when we underwrite, we don't get much [else] along the way, and then at claim time, we have data again.

Filling in the gaps

"So this is where this [smart] watch is filling in the gaps. In our case, getting the data that we've already got an putting it in a useable form," he said about MLC's challenges.

MLC, like many of its insurer peers, is battling a surge in claims costs, lawyers encouraging clients to claim, and some advisers who have been found to provide dodgy life cover advice.

Life insurers are also not the only companies getting on board the wearable technology wagon.

Last year, private health fund nib teamed up with airline Qantas to reward customers with frequent flyer points, if they lead active lifestyles.

Nib is using Fitbits, mobile phones and Apple watches to monitor its customers, and points are rewarded to active users who can convert them for flights, shopping or towards the actual health insurance premiums they pay.

Tracking devices are also not uncommon in the general insurance sector, particularly in the motor vehicle insurance market with telematic devices on the rise around the globe.